Japanese leasing firm trials real estate tokenization

As tokenization continues to be adopted in several sectors, Japan-based financial firm Sumitomo Mitsui Finance and Leasing Company, Limited (SMFL), a subsidiary of Sumitomo Mitsui Financial Group, Inc. (NASDAQ: SMFNF), has expressed a keen interest in experimenting with the offering in real estate.

The firm stated that it will proceed with the pilot initiative through the United States-based tokenization platform Vertalo to revolutionize the local real estate industry. The SMFL’s latest collaboration will integrate Vertalo’s token platform with its existing asset tracking platform, AssetForce.

While AssetForce primarily focuses on physical assets, SMFL argues that the offering can be extended to digital assets, using blockchain technology to track assets. Early details from the proof of concept (PoC) indicate that the integration will allow SMFL to provide real estate firms with a treasure trove of data concerning tokenized assets, including non-fungible tokens (NFTs).

Apart from tokenized real estate transactions, SMFL has its sights on applying the digital asset tracking solution to furniture in leased properties. The SMFL said the solution could also be used in Digital Product Passports (DPP), leveraging blockchain’s immutability and transparency.

SMFL gleans that its innovative solution will address several pain points in the property market, including seamless data transfer between transaction participants. The Japanese-based firm notes the offering, if rolled out commercially, will solve issues concerning the
security and accuracy of data.

“By linking asset data writing and storage technology using a chain, information between multiple parties involved in the ST composition is achieved,” read a company statement. “We developed a system that can centrally manage information exchange and conducted a proof of concept.”

Tokenizing real estate

Real estate firms are turning to tokenization in an attempt to stay ahead of the curve with Japanese firms rolling out offerings and citing the perks of opening the sector to a wider class of investors and fostering trust.

Others point to “fractionalization” as a tool to improve industry liquidity rates, with India’s GIFT City and Israel throwing their hat in the ring.

“To begin with, asset tokenization will be launched for real estate assets, and going forward, other asset classes such as artworks, ships, and aircraft, among others, will be included,”
said one government official. “This will enable more foreign investors to fund development and other projects here.”